Band v Peters

[*1] Band v Peters 2012 NY Slip Op 50067(U) Decided on January 3, 2012 Supreme Court, New York County Ling-Cohan, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on January 3, 2012
Supreme Court, New York County

Doug Band, Plaintiff,

against

Bradford Peters, Defendant.



115845/10



Plaintiff:

Kaufman & Serota, P.C.

524 North Avenue, Suite 202

New Rochelle, NY 10801

212-732-6366

Defendant:

McDermott Will & Emery LLP

340 Madison Avenue

New York, NY 10173

212-547-5400

Doris Ling-Cohan, J.

The following papers, numbered 1-6 were considered on this motion for summary judgment:

PAPERSNUMBERED

Notice of Motion/Order to Show Cause, — Affidavits — Exhibits1, 2, 3

Answering Affidavits — Exhibits ________________________________4, 5

Replying Affidavits6

Cross-Motion:[ ] Yes[ X ] No

Upon the foregoing papers, it is ordered that this motion is decided as indicated below. [*2]

Plaintiff Doug Band brings this breach of lease and conversion action, seeking the return of his security and utility deposits. Plaintiff entered into a residential lease (Lease) with defendant Bradford Peters, to rent defendant's home at 270 Deerfield Road, Watermill, NY (Premises), for a term of 35 days, beginning August 2, 2010 and ending September 6, 2010. Pursuant to the Lease, the rent for the entire term was $92,500.00, with a security deposit of $18,500.00 (Security Deposit) and a utilities deposit of $9,250.00 (Utilities Deposit). It is undisputed that these sums were timely paid by plaintiff and accepted by defendant. At the end of the lease term, plaintiff vacated the Premises but defendant has failed to return the Security and Utilities Deposits.

Plaintiff commenced this action in December 2010, alleging that defendant breached the Lease and converted the Security and Utilities Deposits by commingling the funds with defendant's personal monies in violation of the Lease and New York General Obligations Law (GOL) § 7-103. Defendant joined issue in April 2011 by filing an answer with counterclaims. Thereafter, plaintiff filed this motion for summary judgment contending that no triable issues of fact exist and judgment should be entered against defendant as a matter of law.

The standards of summary judgment are well settled. Summary judgment is a drastic remedy and should only be granted if the moving party has sufficiently established that it is warranted as a matter of law. Alvarez v Prospect Hosp., 68 NY2d 320, 324 (1986). To grant summary judgment, it must be clear that no material or triable issues of fact are presented. See Stillman v Twentieth Century-Fox Film Corp., 3 NY2d 395 (1957). "The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case". Winegrad v New York University Medical Center, 64 NY2d 851, 853 (1985). Once such entitlement has been demonstrated by the moving party, the burden shifts to the party opposing the motion to "demonstrate by admissible evidence the existence of a factual issue requiring a trial of the action or tender an acceptable excuse for his failure to do so." Zuckerman v City of New York, 49 NY2d 557 (1980). However, the Court of Appeals has made clear that bare allegations or conclusory assertions are insufficient to create genuine, bona fide issues of fact necessary to defeat such a motion. See Rotuba Extruders, Inc. v Ceppos, 46 NY2d 223, 231 (1978).

Here, the motion for summary judgment is granted as no triable issues of fact exist. In support of his motion, plaintiff proffers the Lease and copies of the cancelled checks. Plaintiff contends that defendant failed to deposit the Security and Utilities Deposits into segregated bank accounts as required by the Lease and by GOL § 7-103. Instead, plaintiff claims defendant commingled the deposits with defendant's personal funds and never notified plaintiff of the name and address of the bank in which the deposits were made, in violation of GOL § 7-103. Plaintiff argues that the plain language of the Lease provides for the Utilities and Security Deposits to be deposited in a "segregated account within New York State". Lease, ¶¶ 2 and 4. The Lease also provides for the return of the Security Deposit "[w]ithin forty-five (45) days following termination of the lease term". Lease, ¶ 4. Plaintiff further claims that, pursuant to New York Real Property Law (RPL) § 234, he is entitled to recover attorneys' fees and expenses incurred.

Defendant opposes this motion, arguing that issues of fact exist and that plaintiff prematurely moved for summary judgment, since plaintiff failed to comply with discovery. [*3]Defendant denies commingling or converting the Security and Utilities Deposits and contends that plaintiff was provided with notice identifying the depository bank, as the back of the return copies of plaintiff's checks "reflected the identification of the depository bank and account." Peters' Affidavit, ¶ 11. Defendant states that since the checks were written directly to him, he was required to deposit and maintain the checks in a bank account that was under his name. Additionally, defendant states that after the initial deposit into his bank account, the funds were then "internally segregated within the bank account" and not commingled. Peters' Affidavit, ¶ 9. Lastly, defendant argues that plaintiff breached the Lease and forfeited the return of the Security Deposit. Defendant contends that the Lease clearly states that plaintiff "shall not hold any...parties with more than 50 guests (not including staff or service providers) on the premises. Should Tenant hold any such event, Tenant will automatically forfeit the Security Deposit." Lease, ¶ 26. Defendant argues that plaintiff breached the Lease and forfeited the Security Deposit, on August 22, 2010, when plaintiff allegedly held a large party at the Premises with an estimated total of 150-200 guests. Further, defendant alleges that plaintiff caused substantial damage to the lawn and stone driveway, broke a vase, lost the garage door remote controls, failed to return the keys to the Premises, and failed to properly refill the fuel tank as required by the Lease.

Plaintiff argues that due to defendant's action of commingling the Security and Utilities Deposits, defendant forfeited his right to avail himself of the deposits for any purpose. As such, plaintiff argues that even if he breached the Lease, ¶ 26, there were no Security or Utilities Deposits for plaintiff to forfeit as defendant commingled the deposits prior to any alleged breach by plaintiff.

GOL § 7-103 states, in relevant part, in unambiguous language, that:

(1) Whenever money shall be deposited or advanced on a contract...for the use or rental of real property as security...such money, with interest accruing thereon...shall continue to be the money of the person making such deposit...and shall be held in trust by the person with whom such deposit...shall be made and shall not be mingled with the personal moneys or become an asset of the person receiving the same...

(2) Whenever the person receiving money so deposited...shall deposit such money in a banking organization, such person shall thereupon notify in writing each of the persons making such security deposit...giving the name and address of the banking organization in which the deposit of security money is made, and the amount of such deposit...

(3) Any provision of such a contract or agreement whereby a person who so deposits or advances money waives any provision of this section is absolutely void.

It is clear from the language of the Lease and the statute that the Security and Utilities Deposits are to be held in trust and not commingled with defendant's personal funds. It is also clear, and undisputed, that defendant deposited the Security and Utilities Deposits into his personal bank account, rather than in trust for plaintiff as required by GOL § 7-103(1). Despite defendant's claim that the monies were segregated within his bank account, the commingling of funds constitutes a conversion of the funds, calling for the immediate return of the deposits. [*4]Leroy v Sayers, 217 AD2d 63, 69 (1st Dep't 1995). Furthermore, the Sayers court stated that the stamped name of the bank on the back of a cancelled check does not qualify as notice in writing as required by GOL § 7-103(2). Id. at 68-69. As such, defendant has violated GOL § 7-103 and forfeited any right to avail himself of the Security Deposit for any purpose. Dan Klores Assocs. v Abramoff, 288 AD2d 121, 122 (1st Dep't 2001). Thus, plaintiff has made a prima facie showing of entitlement to judgment as a matter of law and defendant has supplied no evidence sufficient to defeat the granting of this motion. Defendant has failed to raise an issue of fact sufficient to defeat plaintiff's motion for summary judgment.

Additionally, defendant states that plaintiff's motion is premature in that plaintiff has failed to comply with his discovery obligations and is purposely withholding information relevant to defendant's defense. "[W]here a party is unable to effectively oppose a motion for summary judgment because the evidence needed is within the exclusive knowledge of the moving party, the court may deny the motion..." Classic Moments Co. v Akata, 176 AD2d 567, 567 (1st Dep't 1991); CPLR 3212 (f). However, defendant has failed to make this showing by failing "to show that facts essential to justify opposition to the motion may emerge upon further discovery. A grant of summary judgment cannot be avoided by a claimed need for discovery unless some evidentiary basis is offered to suggest that discovery may lead to relevant evidence." Bailey v New York City Tr. Auth., 270 AD2d 156, 157 (1st Dep't 2000). Speculation alone is inadequate, and furthermore, a granting of summary judgment for plaintiff does not prevent defendant from obtaining discovery, including a deposition, on defendant's counterclaims. Defendant fails to articulate any relevant evidence within plaintiff's control. Presumably, defendant would be in exclusive custody and control of evidence relating to his defenses, including the bank account he deposited the checks into and the written documentation of notice to plaintiff of the name and address of the banking organization. As defendant has failed to proffer any basis for the discovery, defendant cannot rely on outstanding discovery to defeat plaintiff's motion for summary judgment. As such, plaintiff's motion for summary judgment is granted.

Further, plaintiff is entitled to attorney's fees, as such fees are clearly provided for in the Lease. Paragraph 9B of the Lease provides defendant with reasonable attorney's fees should he be "required to bring any action or proceeding to enforce the terms of this lease agreement and/or to recover for any of Tenant's defaults". RPL § 234 states that where a residential lease conveys a right to recover attorney's fees incurred in any litigation arising out of a claimed breach by the tenant of a lease covenant, "there shall be implied in such lease a covenant by the landlord to pay to the tenant the reasonable attorney's fees and/or expenses incurred by the tenant as the result of the failure of the landlord to perform any covenant or agreement". As such, plaintiff is entitled to reasonable attorney's fees. However, since plaintiff has not submitted proof of such fees, the determination of the amount shall be referred to a Special Referee, as detailed below.

Accordingly, it is

ORDERED that plaintiff's motion for summary judgment is granted. Plaintiff is granted judgment against defendant on the the first and second causes of action in the amount of $27,750.00, together with interest from the date of July 27, 2010, as calculated by the Clerk, together with costs and disbursements, to be taxed by the Clerk upon submission of an appropriate bill of costs; and it is further [*5]

ORDERED that plaintiff's claim for attorney's fees is hereby referred to a Special Referee to hear and determine pursuant to CPLR § 4317, provided that the following provision is complied with; and it is further

ORDERED that a copy of this order with notice of entry shall be served by plaintiff on the Special Referee Clerk (Room 119M), within 45 days to arrange a date for the reference to a Special Referee, and failure to comply shall be deemed a waiver of plaintiff's claim for attorney's fees; and it is further

ORDERED that within 30 days of entry of this judgment and order, plaintiff shall serve a copy upon defendant with notice of entry; and it is further

ORDERED that the remaining discovery shall be expeditiously completed.

This constitutes the decision/order of the Court.

Dated:January 3, 2012

DORIS LING-COHAN, J.S.C.